Govt mulls re­jec­tion of US$300 mil­lion loan from China

THANKS but no thanks, the Myan­mar gov­ern­ment may be pre­par­ing to say to a ma­jor Chi­nese lender. As For­eign Min­is­ter Daw Aung San Suu Kyi dis­cussed the fu­ture of the con­tro­ver­sial My­it­sone dam project and other as­pects of Myan­mar-Chi­nese re­la­tions in Beijing, ques­tions were be­ing raised as to whether the coun­try needs to take on an ad­di­tional US$300 mil­lion in Chi­nese debt.

In Fe­bru­ary last year, the former gov­ern­ment agreed to ac­cept a $700 mil­lion loan from China’s Exim Bank to fund loans to farm­ers, de­spite fierce crit­i­cism from prom­i­nent com­mu­nity fig­ures and so­cial me­dia users who ques­tioned whether the in­ter­est rates were too high.

The then-gov­ern­ment ul­ti­mately per­suaded the Pyi­daungsu Hlut­taw to ac­cept $400 mil­lion of the loan, though par­lia­ment had turned it down in the pre­vi­ous ses­sion due to con­cerns over high in­ter­est rates and dif­fi­cult re­pay­ment sched­ules.

Now doubts have arisen about the wisdom of ac­cept­ing the re­main­ing $300 mil­lion.

U Myo Aung, di­rec­tor of the Coop De­part­ment un­der the Min­istry of Agri­cul­ture, Live­stock and Ir­ri­ga­tion, said, “There is no plan to ac­cept the re­main­ing $300 mil­lion por­tion of the loan.”

Speak­ing at a press con­fer­ence on Au­gust 19, he said the gov­ern­ment would face no penalty for not tak­ing up its op­tion for the out­stand­ing $300 mil­lion.

Exim charges 4.5 per­cent in­ter­est a year and the Co-op De­part­ment lends to farm­ers at 18pc a year, or 1.5pc a month, he said. One of the grounds of crit­i­cism last year was the high in­ter­est rates charged to farm­ers.

Un­der cur­rent Union Min­is­ter U Aung Thu, the de­part­ment be­lieves its loan pro­grams are pop­u­lar with farm­ers. Dur­ing the gov­ern­ment’s 100-day plan, it handed out loans for small in­vest­ments in agri­cul­ture and live­stock in sums of K100,000 to K500,000, to­talling some K18.2 bil­lion, for items such as seeds, in­sec­ti­cide and fer­tilis­ers.

An­other K3.474 bil­lion has also been lent to 489 farm­ers to buy agri­cul­tural equip­ment on the hire pur­chase sys­tem, as well as lend­ing from K100,000 to K150,000 per acre for mon­soon paddy.

Farmer Ko Myo Lin of Py­in­mana town­ship said farm­ers’ fi­nan­cial needs were less press­ing than be­fore. “Loans for mon­soon paddy come from Myan­mar Agri­cul­tural Bank. The loan amount has in­creased to K50,000, which charges only 0.7pc in­ter­est a month, and lends no mat­ter how large the acreage of the farm,” he said.